Retirement may not be as distant a goal as it used to be if you were born between 1967 and 1982. As a Gen Xer in your prime earning years, preparing for retirement can be complicated, especially if you have existing debt. 

Mortgages, student loans, credit cards, and auto payments are financial burdens you may be contending with. 

As your retirement draws nearer, you need a well-thought-out action plan that addresses how you’ll pay off that debt, ideally before your retirement date.

As a financial advisor specializing in working with Gen X clients, I’ll discuss the importance of paying off debt before retirement and describe various ways to accomplish this goal.

The Impact of Debt on Retirement

Let’s be honest: your retirement is probably much closer than you think. If you’re 55 today, retirement could be ten years or less if you hope to exit early from full-time work. Heading into retirement with debt can undermine your plans:

• You are paying down debt, so you are saving less.
• Your income may drop in retirement, but fixed debt payments won’t.
  
• Ongoing debt creates financial and emotional strain, especially when you no longer receive a paycheck.
  
• Travel, hobbies, or helping children financially may have to take a backseat.
  
• Credit card debt, particularly, can be burdensome to pay off due to high interest rates.
  

The bottom line? Tackling debt now isn’t just wise; it’s a critical part of planning. Paying it off frees up cash flow, lowers stress, and gives you a better chance of enjoying your retirement as you envisioned.

Debt doesn’t just affect your bank account. It can lead to decision paralysis or avoidance, putting off savings or ignoring long-term plans altogether. That’s where a clearly defined debt management strategy and a realistic retirement plan can significantly impact your financial security for the rest of your life.

Common Debt Challenges Gen Xers Face

You’re not alone if you’re juggling multiple types of debt. These debts can chip away at your monthly cash flow, making it harder to contribute to your 401(k), IRA, or personal savings accounts:

• 30-year mortgages that haven’t been refinanced
• Parent PLUS loans taken out for their kids’ college tuition
• Credit cards with balances that never seem to shrink
• Auto loans, medical bills, or business-related debt
  

We also see many Gen Xers trying to financially help their parents or adult children, which further stretches limited resources impacted by excessive debt payments.

Strategies to Pay Off Debt and Plan for Retirement

Your financial plan should reflect your goals and values, not just be a monthly statement. Here’s how we help Gen Xers move forward:

1. Assess Your Financial Picture

• What do you owe, and what are the interest rates?
• What are your current monthly income and expenses?
• How much are you contributing to your retirement savings each month?
  

At Sapiat Asset Management, we work closely with you to create a financial profile tailored to your situation, goals, and timelines (retirement strategy). Unlike a one-size-fits-all plan, which may or may not be relevant or realistic for your financial situation, our retirement plans are based on your unique circumstances.

2. Prioritize High-Interest Debt

Debt with double-digit interest rates is a silent killer of wealth. If you have high interest rates, paying down the interest can be challenging, let alone paying down the principal.  This is where the services of a Greeneville CFP ® can help you formulate a plan to pay down debt before you retire. 

Two common ways to pay down debt are the snowball method and the avalanche method. 

• With the snowball approach, you first pay off your smallest balances to build momentum. 
• The avalanche method focuses on paying off debts with the highest interest rates first, which can save you more money over time. 

Whatever you choose, consistency is key. Make more than the minimum payments when you can, and consider consolidating if it lowers your interest or simplifies your payments.

3. Rework the Budget; Even minor adjustments can free up dollars:

• Cancel unused subscriptions
• Trim dining-out expenses
• Automate debt payments and savings contributions
  

We can help you create a realistic budget that supports debt reduction and pursuing your goals for a secure retirement (retirement goals, not either/or).

4. Max Out Retirement Contributions

Once you’re 50, the IRS allows you to make catch-up contributions. For 2025, that can be an additional $7,500 into your 401(k). These additional amounts can make a meaningful difference when they compound over a 10–15-year period. You’re missing out on valuable growth if you’re not taking full advantage of maximizing your retirement plan contributions.

Here are two examples showing how retirement savings can look very different for Gen Xers, depending on how much they contribute. Both are based on a 50-year-old earning $120,000 a year, planning to retire at 67, and getting a 7% annual return on investments.

Jennifer maxes out her contributions:

• Age: 50
• Income: $120,000
• Contribution: $30,500/year (max with catch-up)
• Retires at 67
• Estimated Savings: $1.15 million
  

Jennifer maximizes her remaining working years by maxing out her 401(k). With steady contributions and growth, she builds a seven-figure nest egg.

David contributes 8% of his salary:

• Age: 50
• Income: $120,000
• Contribution: $9,600/year (8%)
• Retires at 67
• Estimated Savings: $360,000
  

David contributes regularly but at a lower rate. His savings grow, but he ends up with less than a third of Jennifer’s balance, potentially limiting some of his options in early retirement years.

The bottom line: Contribution levels in your 50s have a significant impact. The more you can put away now, the higher your standard of living will be in the future.

5. Refinance and Consolidate

Many Gen Xers don’t realize they could refinance a mortgage or student loan and cut interest costs significantly. Consolidating high-interest debt into a single payment can simplify your finances and help you stay on track.

6. Plan for the Unexpected

Unexpected expenses, like medical bills, home repairs, or an unexpected job loss, can quickly derail your retirement plan if you’re not prepared for it:

• Building an emergency fund is a key part of any solid plan. 
• If you’re enrolled in a high-deductible health plan, it’s also worth opening a Health Savings Account (HSA). An HSA allows you to save tax-free for future medical expenses and can help lower your taxable income.

Together, these two tools create a financial cushion that helps protect your retirement savings when life doesn’t go as planned.

Case Study: A Gen X Couple Finds Balance

Here’s a hypothetical example of balancing debt management with retirement savings. 

Meet Mark and Lisa, who are 52 and live in Northeast Tennessee. When they met with us, they had:

• $180K left on their mortgage
• $40K in parent PLUS loans
• $18K in credit card debt
• Less than $100K saved for retirement
  

They felt stuck with no realistic chance of retiring when they wanted to.

After reviewing their cash flow, our team of Greeneville financial advisors built a debt repayment schedule, starting with the credit cards. We helped them refinance their mortgage to a lower rate, cut unnecessary expenses, and incrementally increase their combined retirement contributions.

Two years later, they’ve:

• Paid off all credit card debt
• Increased 401(k) contributions to the max
• Built a $25K emergency fund
• Gained clarity and confidence in their long-term plan
  

That’s the power of having a plan that aligns with your life’s goals and a Greeneville fiduciary financial planner to help you stick to it.

How Sapiat Asset Management Helps Gen X Clients

Sapiat Asset Management isn’t part of a Wall Street firm. We’ve built our firm to serve real people with real concerns. Our office in Greeneville, Tennessee, serves Gen X individuals and families across the U.S. who are serious about getting their finances in order.

We’re known for:

• Holistic Planning: Coordinating debt, retirement, investments, taxes, and life goals.
  
• Clear Communication: No jargon, just high-quality advice using language you will understand.
  
• Personal Connection: You will never be just a number to us.
  

If you’re ready to make progress, we’re ready to help. Schedule a complimentary consultation to start the process.